- Connecticut housing market sees record high prices and a 16-year high in home sales in 2020
- Outmigration from New York City contributes to surges in sales and prices in certain markets
- Trend is likely to continue in 2021 due to continued consumer demand and low mortgage rates
Summary by Dirk Langeveld
Migration patterns driven by the COVID-19 pandemic helped fuel record growth in Connecticut’s housing market in 2020, according to a recent analysis of real estate data by the Connecticut Department of Labor.
The latest Connecticut Economic Digest scrutinizes the factors leading to the state’s real estate boom. It also concludes that this trend is likely to continue through 2021 due to the continuance of factors influencing the market, including strong consumer demand and low mortgage rates, as well as data from the early months of the year showing ongoing growth in permit applications, home sales, and home prices.
Connecticut housing trends
Connecticut home prices hit an all-time high in 2020, while sales were at their highest levels in 16 years. The state recorded 38,641 single-family home sales, a 16.6 percent gain over 2019. There were a total of 9,167 condominium sales, the highest level sine 2007, though this marked a year-over-year gain of just 0.9 percent.
The median price for a single-family home sold in Connecticut in 2020 reached $300,000, up 15.4 percent from 2019. The median sales price for a condominium grew 12 percent to $187,000.
Connecticut was one of the five states with the fastest home price growth between the fourth quarter of 2019 and the fourth quarter of 2020. The typical price gain in the United States during this period was 10.8 percent, but hit 14.1 percent in Connecticut.
Cities and towns in Connecticut authorized 5,471 permits for new single-family and multifamily homes in 2020. While this total was down 6.5 percent from 2019, likely a result of COVID-19 pandemic disruptions, it was up 13.6 percent from 2018. Multifamily development was slightly more prevalent, accounting for 48.9 percent of new permits while single-family homes accounted for 45.9 percent.
Low mortgage rates, which help to make borrowing and homeownership more affordable, continued to be a contributor in housing demand. The average 30-year fixed rate for a mortgage in 2020 was 3.11 percent, down from 3.94 percent in 2019.
Connecticut saw fairly modest population growth between 2010 and 2020, although Census data collection was disrupted by the pandemic. The state’s population increased 0.9 percent during this time, from 3.57 million to 3.61 million.
Both the Census and the Connecticut Department of Economic and Community Development estimated that the state has approximately 1.53 million housing units.
New York outmigration patterns
The COVID-19 pandemic has driven millions of people to relocate, as remote work arrangements offered the opportunity to maintain one’s job while living in a more affordable market. One study determined that outmigration from New York City resulted in 27,200 people moving from the Big Apple to Connecticut.
This trend is reflected in real estate data, with home sales gains and permit applications for new housing stock concentrated in markets that still offer a feasible commute to New York City when necessary. Single-family home sales in Fairfield County were up 34 percent, with the median price in the county growing 19 percent to $536,000. Sales in Litchfield County grew by 31 percent, while the median single-family home sale increased 23 percent to $293,000.
Just over one-third of new housing permits in 2020 were issued in Fairfield County, while New Haven accounted for about one in four permits. Five communities accounted for about one-third of all new housing permits: New Haven, Shelton, Stamford, Danbury, and Simsbury.
An estimated 6.4 percent of Connecticut’s real estate transactions in 2020 were to buyers from out of state. The increased demand from buyers moving to Connecticut was another factor influencing strong home sales growth as well as rapid price growth in the state.
Economic data
The Department of Labor found a mix of positive and negative trends in Connecticut’s economic data for 2020. The state’s economic output, based on real GDP, shrank 4.1 percent against the national decline of 3.5 percent. Personal income growth, fueled largely by direct COVID-19 relief, was up 3 percent in Connecticut and 6.1 percent in the United States; the annual average growth rate in personal income was 2.5 percent in Connecticut and 4.6 percent in the U.S.
Connecticut also saw steeper job losses, with pandemic conditions eliminating 131,400 positions – a 7.8 percent drop in employment compared to the national decrease of 5.8 percent. While Connecticut’s unemployment rate of 7.9 percent in 2020 was slightly below the national rate of 8.1 percent, the monthly rate has been equal to or higher than the U.S. as a whole since June 2020.
At the same time, Connecticut’s real GDP per capita in 2020 was $66,849, above the national figure of $55,592. The state’s per capita income, at $79,771, remained the highest in the U.S.
